Creditors sift through budget

The draft budget’s projections for 2017 are being scrutinized by the country’s creditors and their chief representatives are demanding more data to verify the credibility of the Finance Ministry’s assessments.

The new footing created by the Hellenic Statistical Authority’s recent downward revision of the 2015 primary budget surplus to 0.2 percent of gross domestic product (from 0.7 percent) and Greece’s refusal to reduce the expenditure of the National Defense Ministry are the main reasons for this renewed scrutiny, while the creditors are also asking for data to explain the better-than-expected course of revenues this year.

Sources say the Finance Ministry is preparing a new proposal for the 2017 budget, incorporating all data to have emerged since the submission of the first draft in early October.

Discussions are also focused on the financing of the Solidarity Social Income, which is supposed to be fully implemented next year. The creditors want to establish whether its funding has in fact been secured or if additional measures will be required. If more resources are required, they will come mainly from cutting tax exemptions, with an emphasis on reducing the tax-free threshold, as the creditors realize there is no margin for cutting social benefits.

The government argues there is no need for fresh interventions for 2017, while senior ministry officials stressed on Monday that no new measures will be taken to meet the fiscal targets, and that the issue of the tax-free threshold was closed during the previous bailout review.

Several matters remain pending regarding the out-of-court settlement of corporate arrears to banks, the tax authorities and social security funds. Although it appeared a deal had been reached regarding these matters after Sunday’s meeting between the representatives and Economy Minister Giorgos Stathakis, it later turned out that all that had been agreed was the necessity of an out-of-court settlement mechanism.

Technical talks continued on Monday and the ministry will meet again with the mission chiefs on Wednesday evening. The main disagreement is which enterprises will qualify to enter the settlement process.